Growth outlook boosts market

Dow closes at 10,007, Nasdaq gains 66 points as Microsoft, AOL rise

U.S. stocks rose to records yesterday after a report showed the economy is growing steadily with little inflation, leaving room for share prices to climb.

Microsoft Corp. and America Online Inc. led the gains.

The Nasdaq composite index rose to a record for the first time in two months, and the Dow Jones industrial average closed above 10,000 for the second time in a week. The Standard & Poor's 500 index also reached an all-time high.

"It doesn't get much better than this," said Michael Manns, who helps invest $8.5 billion in growth stocks for American Express Asset Management Inc. in Minneapolis.

The trigger for yesterday's rally was Friday's employment report, which showed the economy added jobs last month while wages rose less than expected, pointing to rising profits and stable or lower interest rates. The U.S. market was closed for Good Friday when the report came out.

The Nasdaq jumped 66.69, or 2.7 percent, to 2,560.06, its highest close since Feb. 1. Internet shares, including Yahoo! Inc., gained the most. The Dow average rose 174.82, or 1.8 percent, to a record 10,007.33, led by International Business Machines Corp. The S&P 500 climbed 27.40, or 2.1 percent, to 1321.12.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, rose 3.55, to 402.29; the Wilshire 5,000 index jumped 221.00, to 11,989.85; the American Stock Exchange composite index advanced 9.94, to 721.24; and the S&P 400 midcap index added 3.21, to 369.89.

The Sun-Bloomberg Maryland index of the top 100 Maryland stocks fell 1.37, to 176.92.

Advancing stocks led decliners on the New York Stock Exchange by a 17-to-13 ratio.

The prospect of steady interest rates makes investors more willing to pay high prices for fast earnings growth. IBM gained $6.625, to $183.625, and Microsoft rose $2.25, to $94.9375. General Electric Co. climbed $3, to $114.625.

"The U.S. economy remains robust and the corporate earnings outlook is improving," Merrill Lynch & Co. chief economist Bruce Steinberg said in a report yesterday. He raised his forecast for growth in earnings and the economy for this year and 2000.

Yahoo! soared $39.375, to $219.125, as individual investors snapped up shares of the No. 1 Internet directory. Analysts are optimistic that Yahoo!'s purchase of Broadcast.com Inc., announced last week, will boost revenue. Yahoo! reports earnings tomorrow, and some investors may be betting that it will beat the 8 cents a share expected by Wall Street analysts.

CBS Corp. rose $1.75, to $41.875, after the San Jose Mercury News reported that the network has held talks over the past year about a potential combination with America Online. AOL stock rose $16.50, to $166.50. The talks included a possible purchase of CBS by AOL, the newspaper reported, quoting a person familiar with the discussions.

Dell Computer Corp., the most active U.S. stock, gained $2.875, to $44.0625, as investors anticipate good news from the No. 3 personal computer maker when it briefs analysts Thursday.